Brean Capital Brushes Off UBS Casino Concerns As MGM Resorts International (NYSE:MGM) Reviews Spin-off

The lost interest in MGM Resorts International (NYSE:MGM) came back after Brean Capital tipped that Macau casino sector might have left the worst behind. The research firm placed a ‘buy’ rating on the stock alongside expressing similar views for other players in the space. The investment firm noted that the projections of severe revenue decline in casino stocks are bit stretched out. Brean Capital suggested that the opening of new casinos towards the second-half of the year should help increase traffic again.

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Brean v/s UBS

Brean’s bullish take on Macau’s casino sector came after UBS forecasted that the recovery in the region could push to 2016 as against the earlier forecast of positive growth in the second half of the year. UBS noted that proxy gambling has some scope for growth, but regulatory action could erode revenues even before takeoff.

Separately, MGM Resorts International (NYSE:MGM) has said that it will consider the proposal for its shareholder Land and Buildings to spin off the unit in two parts. The shareholder has been pushing the casino operator to divide out its real estate assets from that of hotels in order to form a real estate investment trust (REIT). The company also said that it is considering nominating four candidates of the shareholder company to its board, including founder Jonathan Litt.

Spin-off likely

Earlier Litt’s Lands and Buildings, an investment management group, claimed that if MGM Resorts International (NYSE:MGM) decides to split its real estate business from its hotel businesses then it could potentially increase its stock value by more than double to $55 per share. Lands and Buildings perceive that the real estate holdings of the company are highly undervalued in the market, and a spin-off could fix the issue. It is to be noted that Lands and Building has a 0,8% stake in MGM Resorts International (NYSE:MGM). The stock of the company rose by 1.47% to $22.85 in the last trading session.

About the Author

Michael joined US Markets Daily in 2009 and is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments.

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